The main architect of the Dairy Security Act, the National Milk Producers Federation has joined the dicussion working on a compromise dairy package for the farm bill.

On Thursday morning it was reported that House Ag Committee Chair Frank Lucas had “floated” a compromise dairy plan for the farm bill which did not contain the supply-management Dairy Management Stabilization Plan (DMSP) but sought “another disincentive to address overproduction of milk.”

One such option would be establishing a farm base and that in times of overproduction, producers who exceed their farm base for two consecutive months would only receive a percentage of their margin insurance payment. The Secretary of Agriculture could also raise producer premiums and/or buy additional dairy products for food programs in such times.

Congressman Collin Peterson, the lead advocate for supply management indicated he may be willing to compromise telling POLITICO and The Hagstrom Report; “The fact that it’s being done in the right direction makes it more easy for me to go along with it. It’s not what I wanted. I won’t be happy, but I won’t hold the bill up over it.”

National Milk Producers Federation president and CEO Jim Mulhern issued a statement late Thursday saying:

We are now engaged in discussions with agriculture committee staff on an alternative approach to creating a dairy safety net that would contain inducements to help achieve a supply-demand balance and prevent catastrophic milk price collapses like we experienced in 2009.

At this point, it is conceivable that an alternative mechanism could be developed, relying upon adjustments to the program’s margin insurance payout structure and participant premium rates, among other options. Any such approach must still offer an effective risk management tool to farmers, while containing suitable incentives to program enrollees to achieve cost controls. As always, the devil is in the details, and we will not support any program that does not effectively address the needs of our members throughout the U.S.

Hope is the bill could come to the floor of the House the week of January 27th.